April 23 (Bloomberg) -- American Vanadium Corp., owner of
the only known U.S. deposit of the metal, agreed to install an
energy-storage system designed to reduce power costs for the
agency that operates New York’s subways and buses.

The $1.2 million project will feature three vanadium-flow
batteries at a Metropolitan Transportation Authority building in
downtown Manhattan, the Vancouver-based company said today in a
statement.

The system is expected to validate the company’s technology
as a way to cut utility bills. The MTA plans to charge the
batteries at night when power is cheap and discharge them when
energy is more expensive, said Bill Radvak, American Vanadium’s
chief executive officer.

“The MTA wants it there as they are big believers in
energy storage,” Radvak said in an interview. “This is a very
high profile site that will stimulate the market.” American
Vanadium is paying about $700,000 and the New York State Energy
Research and Development Authority will pay another $500,000.

Demand for power storage is growing, driven in part by
wider use of battery systems to complement rooftop solar-power
projects and electric vehicles. Tesla Motors Inc. on Feb. 26
announced plans for a $5 billion factory to cut the cost and
increase the supply of batteries for both homes and its electric
cars. California regulators in October ordered the state’s
utilities to buy 1,325 megawatts of energy storage by 2020.

Vanadium Batteries

The batteries are capable of storing 130 kilowatt-hours
each. They are produced by DMG Mori Seiki AG’s Gildemeister
unit, which has installed 50 of the systems under the brand name
CellCube, Radvak said.

The CellCube batteries use vanadium dissolved in sulfuric
acid. Unlike standard lead-acid batteries or the lithium-ion
units used by Tesla, they can be recharged and discharged
indefinitely and may last as long as 20 years, Radvak said.

“The system excels at multiple hours of energy for long-duration requirements,” he said. “It’s also very safe. It
can’t light on fire. The difficulty has been commercializing
it.”

American Vanadium intends to mine ore in Nevada and expects
to receive an environmental permit from the U.S. Bureau of Land
Management this year, Radvak said. It has a supply deal with
Gildemeister and an agreement to market the batteries in North
America.